A plain-English breakdown of premium tax credits and who qualifies.
A health insurance subsidy — technically called a premium tax credit — is money that reduces what you pay each month for a marketplace health plan. Instead of getting a check, the credit is typically applied directly to your premium, so you simply pay a lower amount up front. The size of your credit depends on your household income relative to the federal poverty level and the cost of plans available in your area.
Subsidy eligibility is based on estimated household income for the year you want coverage, not just your current paycheck. Many people assume they make too much to qualify and never check — but income limits are higher than most expect, and there is no hard income ceiling at the federal level under current rules. Household size, where you live, and the cost of local plans all factor into the calculation.
If you're self-employed, work seasonally, or have income that varies, it's easy to misjudge your eligibility. Subsidies are based on a projected annual income figure that you can update during the year if your circumstances change, which means you're not locked into a single guess made months in advance.
Subsidy amounts vary by zip code, age, household size, and the specific plans sold in your area, so there's no single number that applies to everyone. Checking your actual eligibility takes about a minute and costs nothing.
Have more questions? Visit our FAQ page or read the full Coverage Guide.